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Mercantile Bitten by Amaranth

The Baltimore bank loses money on the failed hedge fund.

Mercantile Bankshares

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is the latest financial institution to fess up to taking a hit from the implosion last month at Amaranth.

The Baltimore-based bank, which is being acquired by

PNC Financial

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, said it incurred a $1 million loss on its investment in the failed Connecticut hedge fund, which lost about $6 billion on a series of bad bets on natural gas prices.

Mercantile disclosed the Amaranth loss in its third-quarter earnings report. The loss on the Amaranth investment contributed to a $1.8 million year-over-year decline in revenue from the bank's hedge fund investments.

Overall, Mercantile said third-quarter profit just 1% to $71.6 million, or 57 cents a shares, up from $71 million, or 57 cents a share, a year ago. Analysts were looking for earnings of 60 cents a share.

Amaranth wasn't the only poor-performing investment for the bank in the quarter. Mercantile also said that revenue from its private equity investments declined by $3 million in the period.

The combined decline in revenue from the bank's investments in hedge funds and private equity deals resulted in a 7.3% drop in noninterest income to $4.7 million.

Mercantile isn't the only financial institution to get bitten by the events at Amaranth. Other banks and Wall Street firms that sank money into Amaranth include

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Goldman Sachs

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Morgan Stanley

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Deutsche Bank

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Credit Suisse

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and Man Group, the big hedge fund conglomerate.